Totm Technologies is looking to divest two of its subsidiaries to Yinda – a company associated with its chairman - as it focuses on its biometrics solutions business.
The move comes as Totm, which used to go by the name of Yinda Infocomm, looks to move away from its “loss-making” telecommunications business through a package sale of Yinda Technology Singapore and Yinda Technology (Thailand) for a nominal sum of $1,001.
Of this, $1,000 is attributable to Yinda Technology (Thailand) and $1 for Yinda Technology Singapore.
Had the units been independently valued, Yinda Technology Singapore would have been valued at $nil due to its substantial net liability position.
The group says that Yinda Technology (Thailand) could have fetched a consideration sum close to its net asset value of $1.7 million. However, this amount would not have been sufficient for the company to repay an existing loan.
The package deal was thus reached at after negotiations, the group says in a Dec 10 bourse filing.
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The deal involves Totm novating some $3.2 million to the buyer that is owed under shareholder loans; while $1 million would be waived.
The board estimates that the sale would thus yield a net gain of around $415,000.
Independent shareholders will need to approve this deal at an extraordinary general meeting, since Totm’s non-independent and non-executive chairman Song Xingyi holds a 51.48% stake in Shanghai Yinda Group - a company assoicated with Yinda. Another 33.66% is held by Song’s son Wang Hua; 13.86% by Song’s husband Wang Zhijun and 1% by Shao Lifang, the executive director of Totm.
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Totm believes that identifying biometric technology solutions will bode well for it, since the segment managed to generate profits of $0.5 million in its FY2021 ended Sep 30, despite only contributing to revenue for two months.
By contrast, the group had an overall net loss of $8.4 million which mainly stemmed from its technology business.
On a pro forma basis, Totm's loss per share would have narrowed from 1 cent to 0.62 cents, had the deal been reached on Jun 1, 2020. Meanwhile net tangible assets would have risen from 1.1 cents to 1.15 cents, had the deal gone through on May 31, 2021, the board notes.
Shares in Totm closed up 0.7 cents or 3.72% at 19.5 cents, before the announcement.
Cover image: Albert Chua/The Edge Singapore
